John Linton
I read the latest edition of BRW's report on the Top 500 privately owned Australian companies yesterday. It isn't clear how BRW select the companies in this listing as, with the 500th company on the list having a revenue of $A71.1 million I would have thought that more than one Australian 'communications' company (the only one I could find was GoTalk) would hve been on the list.
I don't know what to make of the fact that TPG and InterNode/Agile, and perhaps even WestNet didn't rate a mention as I would have thought that with their publicly claimed customer numbers they would have annual revenues in excess of $A71.1 million. However perhaps the BRW's criteria for making the list exclude those companies. Then again - maybe they didn't have a reported revenue in excess of $A71.1 million in FY2007.
The only fact that struck me about the GoTalk listing (and I know absolutely nothing about that company) was the number of employees (320) compared to the annual revenue ($A136.5 million). Whenever I see statements in the press by ISP/Communications companies they seem to have far too many employees for their announced revenues - in this case GoTalk's is around $A426,000 per employee which,at the sorts of net margins available in the types of comms businesses they appear to operate in seems, to me, to be not enough to make a profit.
Since I wrote this original set of comments someone has pointed out to me that InterNode appeared at number 446 with a revenue of $88 million (up 54% on the previous reporting year) and with 304 employees (up 51% on the previous year). If my rough math is correct that means that Internode's revenue:employee ratio is ony $A290,000 which seems unbelievably low for a communications company.
Very strange figures.
Maybe I'm not savvy enough to make higher net profits by buying better or generating enough customer interest to set and get higher prices for the services that Exetel provides - that could well be the case on both counts. From what I see from the various financial analyses and research that I do that could be the only explanations. I need to look at re-negotiating lower costs with all of pour curent providers of base line services or move to selling different services where the margins are better as I doubt that I'll have much luck with people like Telstra Wholesale as a prime example.
The BRW article prompted me to review the files I keep on 'competitors' in terms of the public statements they make and the information I pick up from what I consider to be pretty reliable sources (mainly suppliers to and ex employees of those companies). From what that information seems to show there is nothing more that Exetel can do to compete more effectively as we seem to have more efficiencies in operation, by a very wide margin, than any of them. The only conclusion has to be that they buy much better than we do.
Over this weekend I must put in place a plan to reduce the costs of all the major services we buy.